AN ACT to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §24-2-4e; and to
amend and reenact §46-9-109 of said code, all relating
generally to the financing of environmental control activities
by certain qualified electric utilities through the issuance
of environmental control bonds.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §24-2-4e; and that
§46-9-109 of said code be amended and reenacted, all to read as
follows:

CHAPTER 24. PUBLIC SERVICE COMMISSION.

ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.
§24-2-4e. Environmental control bonds.
(a) Legislative findings. -- The Legislature hereby finds and
declares: (i) That electric utilities in the state face the need to
install and construct emission control equipment at existing
generating facilities in the state in order to meet the
requirements of existing and anticipated environmental laws and
regulations and otherwise to reduce emissions from those electric
generating facilities; (ii) that the capital costs associated with
the installation and construction of emission control equipment are
considerable; (iii) that the financial condition of some electric
utilities may make the use of traditional utility financing
mechanisms to finance the construction and installation of emission
control equipment difficult or impossible and that this situation
may cause such utilities to defer the installation of emission
control equipment, to incur higher financing costs, to minimize or
eliminate their use of high-sulfur coal mined in the State or to
use other financing alternatives that are less favorable to the
state and its citizens; (iv) that the construction and installation
of emission control equipment by utilities will create public
health and economic benefits to the state and its citizens,
including, without limitation, emissions reductions, economic
development, job growth and retention and the increased use of
high-sulfur coal mined in the State; (v) that customers of electric
utilities in the state have an interest in the construction and installation of emission control equipment at electric-generating
facilities in the state at a lower cost than would be afforded by
traditional utility financing mechanisms; (vi) that alternative
financing mechanisms exist which can result in lower costs to
customers and the use of these mechanisms can ensure that only
those costs associated with the construction and installation of
emission control equipment at electric-generating facilities
located in the state that generate electric energy for their
ultimate use will be included in customer rates; and (vii) that in
order to use such alternative financing mechanisms, the Commission
must be empowered to adopt a financing order that advances these
goals. The Legislature, therefore, finds that it is in the
interest of the state and its citizens to encourage and facilitate
the use of alternative financing mechanisms that will enable
certain utilities to finance the construction and installation of
emission control equipment at electric-generating facilities in the
state under certain conditions and to empower the Commission to
review and approve alternative financing mechanisms as being
consistent with the public interest, as set forth in this section.
(b) Definitions. --
As used in this section:
(1) "Adjustment mechanism" means a formula-based mechanism for
making any adjustments to the amount of the environmental control
charges that are necessary to correct for any over-collection or under-collection of the environmental control charges or otherwise
to ensure the timely and complete payment and recovery of
environmental control costs and financing costs. The adjustment
mechanism is not to be used as a means to authorize the issuance of
environmental control bonds in a principal amount greater, or the
payment or recovery of environmental control costs in an amount
greater, than that which was authorized in the financing order
which established the adjustment mechanism.
(2) "Ancillary agreement" means any bond insurance policy,
letter of credit, reserve account, surety bond, swap arrangement,
hedging arrangement, liquidity or credit support arrangement or
other similar agreement or arrangement entered into in connection
with the issuance of environmental control bonds that is designed
to promote the credit quality and marketability of the bonds or to
mitigate the risk of an increase in interest rates.
(3) "Assignee" means any person or legal entity to which an
interest in environmental control property is sold, assigned,
transferred or conveyed (other than as security) and any successor
to or subsequent assignee of such a person or legal entity.
(4) "Bondholder" means any holder or owner of an environmental
control bond.
(5) "Environmental control activity" means any of the
following:
(A) The construction, installation and placing in operation of environmental control equipment at a qualifying generating
facility.
(B) The shutdown or retirement of any existing plant,
facility, unit or other property at a qualifying generating
facility to reduce, control or eliminate environmental emissions.
(6) "Environmental control bonds" means bonds, debentures,
notes, certificates of participation, certificates of beneficial
interest, certificates of ownership or other evidences of
indebtedness or ownership that are issued by a qualifying utility
or an assignee, the proceeds of which are used directly or
indirectly to recover, finance, or refinance environmental control
costs and financing costs, and that are secured by or payable from
environmental control revenues.
(7) "Environmental control charge" means a nonbypassable
charge paid by a customer of a qualifying utility for the recovery
of environmental control costs and financing costs.
(8) "Environmental control cost" means any cost, including
capitalized cost relating to regulatory assets and capitalized cost
associated with design and engineering work, incurred or expected
to be incurred by a qualifying utility in undertaking an
environmental control activity and, with respect to an
environmental control activity, includes the unrecovered value of
property that is retired, together with any demolition or similar
cost that exceeds the salvage value of the property. "Environmental control cost" includes preliminary expenses and
investments associated with environmental control activity that are
incurred prior to the issuance of a financing order and that are to
be reimbursed from the proceeds of environmental control bonds.
"Environmental control cost" does not include any monetary penalty,
fine or forfeiture assessed against a qualifying utility by a
government agency or court under a federal or state environmental
statute, rule or regulation.
(9) "Environmental control equipment" means any device,
equipment, structure, process, facility or technology that is
designed for the primary purpose of preventing, reducing or
remediating environmental emissions and that has been or is to be
constructed or installed at a qualifying generating facility.
(10) "Environmental control property" means all of the
following:
(A) The rights and interests of a qualifying utility or an
assignee under a financing order, including the right to impose,
charge, collect and receive environmental control charges in the
amount necessary to provide for the full payment and recovery of
all environmental control costs and financing costs determined to
be recoverable in the financing order and to obtain adjustments to
the charges as provided in this section and any interest in the
rights and interests.
(B) All revenues, receipts, collections, rights to payment, payments, moneys, claims or other proceeds arising from the rights
and interests specified in paragraph (A) of this subdivision.
(11) "Environmental control revenues" means all revenues,
receipts, collections, payments, moneys, claims or other proceeds
arising from environmental control property.
(12) "Environmental emissions" means the discharge or release
of emissions from electric generating facilities into the air, land
or waters of the state.
(13) "Equity ratio" means, as of any given time of
determination, the common equity of a qualifying utility as
calculated pursuant to the uniform system of accounts required to
be used in the filings of the qualifying utility with the federal
Energy Regulatory Commission. "Equity ratio" shall be calculated
excluding the effect of the issuance of environmental control bonds
or the write down of discontinued operations.
(14) "Financing cost" means the costs to issue, service,
repay, or refinance environmental control bonds, whether incurred
or paid upon issuance of the bonds or over the life of the bonds,
and approved for recovery by the Commission in a financing order.
"Financing cost" may include any of the following:
(A) Principal, interest and redemption premiums that are
payable on environmental control bonds.
(B) Any payment required under an ancillary agreement and any
amount required to fund or replenish a reserve account or other account established under any indenture, ancillary agreement or
other financing document relating to the environmental control
bonds.
(C) The cost of retiring or refunding any existing debt and
equity securities of a qualifying utility in connection with the
issuance of environmental control bonds, but only to the extent the
securities were issued for the purpose of financing environmental
control costs.
(D) Any costs incurred by or on behalf of or allocated to a
qualifying utility to obtain modifications of or amendments to any
indenture, financing agreement, security agreement or similar
agreement or instrument relating to any existing secured or
unsecured obligation of a qualifying utility or an affiliate of a
qualifying utility, or any costs incurred by or allocated to a
qualifying utility to obtain any consent, release, waiver or
approval from any holder of such an obligation, that are necessary
to be incurred to permit a qualifying utility to issue or cause the
issuance of environmental control bonds.
(E) Any taxes, franchise fees or license fees imposed on
environmental control revenues.
(F) Any cost related to issuing and servicing environmental
control bonds or the application for a financing order, including,
without limitation, servicing fees and expenses, trustee fees and
expenses, legal fees and expenses, administrative fees, placement fees, capitalized interest, rating agency fees and any other
related cost that is approved for recovery in the financing order.
(15) "Financing order" means an order of the Commission
pursuant to subsection (d) of this section that grants, in whole or
in part, an application filed pursuant to subsection (c) of this
section and that authorizes the construction and installation of
environmental control equipment, the issuance of environmental
control bonds in one or more series, the imposition, charging and
collection of environmental control charges, and the creation of
environmental control property. A financing order may set forth
conditions or contingencies on the effectiveness of the relief
authorized therein and may grant relief that is different from that
which was requested in the application.
(16) "Financing parties" means:
(A) Any trustee, collateral agent or other person acting for
the benefit of any bondholder.
(B) Any party to an ancillary agreement the rights and
obligations of which relate to or depend upon the existence of
environmental control property, the enforcement and priority of a
security interest in environmental control property, the timely
collection and payment of environmental control revenues or a
combination of these factors.
(17) "Financing statement" means a financing statement as
defined in subdivision (39), subsection (a), section one hundred two, article nine, chapter forty-six of this code.
(18) "Investment grade" means, with respect to the unsecured
debt obligations of a qualifying utility at any given time of
determination, a rating that is within the top four investment
rating categories as published by at least one nationally
recognized statistical rating organization as recognized by the
United States Securities and Exchange Commission.
(19) "Nonbypassable" means that the payment of an
environmental control charge may not be avoided by any electric
service customer located within a utility service area, and must be
paid by any such customer that receives electric delivery service
from the qualifying utility for as long as the environmental
control bonds are outstanding.
(20) "Nonutility affiliate" means, with respect to any
qualifying utility, a person that: (i) Is an affiliate of the
qualifying utility as defined in 15 U. S. C. §79b(a)(11); and (ii)
is not a public utility that provides retail utility service to
customers in the state within the meaning of section two, article
one of this chapter.
(21) "Parent" means, with respect to any qualifying utility,
any registered holding company or other person that holds a
majority ownership or membership interest in the qualifying
utility.
(22) "Qualifying generating facility" means any electric generating facility that: (i) Has generated electric energy for
ultimate sale to customers in the state before the effective date
of this section; and (ii) is owned by a qualifying utility or, on
the expected date of issuance of the environmental control bonds
authorized in a financing order, will be owned by a qualifying
utility.
(23) "Qualifying utility" means:
(A) Any public utility that is: (i) Engaged in the delivery of
electric energy to customers in this state; and (ii) at any time
between the date which is two years immediately preceding the
effective date of this section and the date on which an application
for a financing order is made, has or had a credit rating on its
unsecured debt obligations that is below investment grade.
(B) For so long as environmental control bonds issued pursuant
to a financing order are outstanding and the related environmental
control costs and financing costs have not been paid in full, the
public utility to which the financing order was issued and its
successors.
(24) "Registered holding company" means, with respect to a
qualifying utility, a person that is: (i) A registered holding
company as defined in 15 U. S. C. §79b(a)(12); and (ii) an
affiliate of the qualifying utility as defined in 15 U. S. C.
§79b(a)(11).
(25) "Regulatory sanctions" means, under the circumstances presented, any regulatory or ratemaking sanction or penalty that
the Commission is authorized to impose pursuant to this chapter or
any proceeding for the enforcement of any provision of this chapter
or any order of the Commission that the Commission is authorized to
pursue or conduct pursuant to this chapter, including without
limitation: (i) The initiation of any proceeding in which the
qualifying utility is required to show cause why it should not be
required to comply with the terms and conditions of a financing
order or the requirements of this section; (ii) the imposition of
civil penalties pursuant to section three, article four of this
chapter and the imposition of criminal penalties pursuant to
section four of said article, in either case with reference to the
provisions of section eight of said article; and (iii) a proceeding
by mandamus or injunction as provided in section two of this
article.
(26) "Successor" means, with respect to any legal entity,
another legal entity that succeeds by operation of law to the
rights and obligations of the first legal entity pursuant to any
bankruptcy, reorganization, restructuring or other insolvency
proceeding, any merger, acquisition, or consolidation, or any sale
or transfer of assets, whether any of these occur as a result of a
restructuring of the electric power industry or otherwise.
(27) "Utility service area" means: (i) The geographic area of
the state in which a qualifying utility provides electric delivery service to customers at the time of issuance of a financing order;
and (ii) for as long as environmental control bonds issued pursuant
to a financing order are outstanding, any additions to or
enlargements of said geographic area, whether or not approved by
the Commission in a formal proceeding.
(c) Application for financing order. --
(1) A qualifying utility, or two or more affiliated qualifying
utilities, may apply to the Commission for a financing order under
this section.
(2) An application for a financing order under this section
shall be filed only as provided in this subdivision.
(A) An application for a financing order under this section
shall be filed as part of the application of the qualifying utility
or qualifying utilities under section eleven of this article for a
certificate of public convenience and necessity to engage in
environmental control activities.
(B) If a qualifying utility or qualifying utilities have an
application for a certificate of public convenience and necessity
to engage in environmental control activities pending before the
Commission on the effective date of this section, the qualifying
utility or qualifying utilities may file a separate application for
a financing order and the Commission shall join or consolidate the
application for a financing order with the pending application for
a certificate of public convenience and necessity. Notwithstanding any provision of section eleven of this article to the contrary or
the total project cost of the proposed environmental control
activities, the Commission shall render its final decision on any
joined or consolidated proceeding for a certificate of public
convenience and necessity and a financing order as described in
this paragraph within two hundred seventy days of the filing of the
application for the financing order and within ninety days after
final submission of the joined or consolidated application for
decision following a hearing.
(3) In addition to any other information required by the
Commission, an application for a financing order shall include the
following information:
(A) Evidence that the applicant is a qualifying utility;
(B) A description of the environmental control activities that
the qualifying utility proposes to undertake, including a detailed
description of the environmental control equipment to be
constructed or installed at one or more qualifying generation
facilities;
(C) An explanation why the environmental control activities
described in the application are necessary in the context of the
qualifying utility's operations, current and anticipated
environmental regulations, the prospect of enforcement proceedings
or litigation against the qualifying utility if the environmental
control activities are not undertaken and the utility's long-range environmental compliance plans;
(D) A description of any alternatives to the environmental
control activities described in the application that the qualifying
utility considered and an explanation of why each alternative
either is not feasible or was not selected;
(E) An estimate of the environmental control costs associated
with the environmental control activities described in the
application, including the estimated cost of the environmental
control equipment proposed to be installed;
(F) An estimated schedule for the construction or installation
of the environmental control equipment;
(G) An estimate of the date on which the environmental control
bonds are expected to be issued and the expected term over which
the financing costs associated with the issuance are expected to be
recovered, or if the bonds are expected to be issued in more than
one series, the estimated issuance date and expected term for each
bond issuance;
(H) The portion of the environmental control costs the
qualifying utility proposes to finance through the issuance of one
or more series of environmental control bonds;
(I) An estimate of the financing costs associated with each
series of environmental control bonds proposed to be issued;
(J) An estimate of the amount of the environmental control
charges necessary to recover the environmental control costs and financing costs estimated in the application and the proposed
calculation thereof, which estimate and calculation should take
into account the estimated date of issuance and estimated principal
amount of each series of environmental control bonds proposed to be
issued;
(K) A proposed methodology for allocating financing costs
among customer classes;
(L) A description of the proposed adjustment mechanism; and
(M) A description of the benefits to the customers of the
qualifying utility and the state that are expected to result from
the financing of the environmental control costs with environmental
control bonds as opposed to the use of traditional utility
financing mechanisms.
(4) An application for a financing order may restate or
incorporate by reference any information required pursuant to
subdivision (3) of this subsection that the qualifying utility
previously filed with the Commission in connection with an
application for a certificate of public convenience and necessity
under section eleven of this article as described in paragraph (B),
subdivision (2) of this subsection.
(d) Issuance of financing order. --
(1) Notice of an application for a financing order shall be
given as a Class I legal advertisement in compliance with the
provisions of article three, chapter fifty-nine of this code, with the publication area being each county in which the environmental
control activities are to be undertaken and each county in the
state in which the qualifying utility provides service to
customers. If no substantial protest is received within thirty
days after the publication of notice, the Commission may waive
formal hearing on the application.
(2) The Commission shall issue a financing order, or an order
rejecting the application for a financing order, as part of its
final order on the application of the qualifying utility or
qualifying utilities for a certificate of public convenience and
necessity to engage in environmental control activities as
described in subdivision (2), subsection (c) of this section.
(3) The Commission shall issue a financing order if the
Commission finds all of the following:
(A) That the applicant is a qualifying utility;
(B) That the environmental control activities, including the
environmental control equipment to be constructed or installed at
one or more qualifying generation facilities, are necessary and
prudent under the circumstances and are preferable to any
alternatives available to the qualifying utility;
(C) That the cost of the environmental control activities,
including the environmental control equipment to be constructed or
installed at one or more qualifying generation facilities, is
reasonable;
(D) That the proposed issuance of environmental control bonds
will result in overall costs to customers of the qualifying utility
that: (1) Are lower than would result from the use of traditional
utility financing mechanisms; and (2) are just and reasonable;
(E) That the financing of the environmental control costs with
environmental control bonds will result in benefits to the
customers of the qualifying utility and the state; and
(F) That the proposed issuance of environmental control bonds,
together with the imposition and collection of the environmental
control charges on customers of the qualifying utility, are just
and reasonable and are otherwise consistent with the public
interest and constitute a prudent, reasonable and appropriate
mechanism for the financing of the environmental control activities
described in the application.
(4) The Commission shall include the following findings and
requirements in a financing order:
(A) A determination of the maximum amount of environmental
control costs that may be financed from proceeds of environmental
control bonds authorized to be issued in the financing order;
(B) A description of the financing costs that may be recovered
through environmental control charges and the period over which the
costs may be recovered, subject to the application of the
adjustment mechanism as provided in subsection (e) of this section.
As part of this description, the Commission may include qualitative or quantitative limitations on the financing costs authorized in
the financing order;
(C) A description of the adjustment mechanism and a finding
that it is just and reasonable; and
(D) A description of the environmental control property that
is created and that may be used to pay, and secure the payment of,
the environmental control bonds and financing costs authorized to
be issued in the financing order.
(5) A financing order may provide that the creation of
environmental control property shall be simultaneous with the sale
of the environmental control property to an assignee as provided in
the application and the pledge of the environmental control
property to secure environmental control bonds.
(6) A financing order may authorize the qualifying utility to
conduct environmental control activities, including the
construction or installation of environmental control equipment, on
an estimated schedule approved in the financing order and through
the issuance of more than one series of environmental control
bonds. In this case, the qualifying utility will not subsequently
be required to secure a separate financing order for each issuance
of environmental control bonds or for each scheduled phase of the
construction or installation of environmental control equipment
approved in the financing order.
(7) The Commission may require, as a condition to the effectiveness of the financing order but in every circumstance
subject to the limitations set forth in subdivision (1), subsection
(f) of this section, that the qualifying utility give appropriate
assurances to the Commission that the qualifying utility and its
parent will abide by the following conditions during any period in
which any environmental control bonds issued pursuant to the
financing order are outstanding, in addition to any other
obligation either may have under this code or federal law:
(A) Without first obtaining the prior consent and approval of
the Commission, the qualifying utility will not:
(1) Lend money, directly or indirectly, to a registered
holding company or a nonutility affiliate; or
(2) Guarantee the obligations of a registered holding company
or a nonutility affiliate.
(B) If: (i) For a period of twelve consecutive months
immediately preceding the date of determination, the qualifying
utility has had an equity ratio of below thirty percent and neither
the qualifying utility nor its parent has had a credit rating on
its unsecured debt obligations that is investment grade; and (ii)
the Commission determines that the present ability of the
qualifying utility to meet its public service obligations would be
impaired by the payment of dividends, the Commission may order the
qualifying utility to limit or cease the payment of dividends for
a period not exceeding one hundred eighty days from the date of determination, which order may be extended for one or more
additional periods not to exceed one hundred eighty days each if
the Commission determines that the conditions set forth in this
paragraph continue to exist as of the date of each such
determination.
(C) Neither the parent nor a nonutility affiliate will direct
or require the qualifying utility to file a voluntary petition in
bankruptcy: Provided, That nothing in this paragraph shall
preclude the qualifying utility from filing a voluntary petition in
bankruptcy if in the determination of the board of directors of the
qualifying utility in the exercise of its fiduciary duty, the
filing of its own voluntary petition in bankruptcy would be proper
under applicable federal statutory and common law.
(8) A financing order may require the qualifying utility to
file with the Commission a periodic report showing the receipt and
disbursement of proceeds of environmental control bonds. A
financing order may authorize the staff of the Commission to review
and audit the books and records of the qualifying utility relating
to the receipt and disbursement of proceeds of environmental
control bonds. The provisions of this subdivision shall not be
construed to limit the authority of the Commission under this
chapter to investigate the practices of the qualifying utility or
to audit the books and records of the qualifying utility.
(9) In the case of two or more affiliated qualifying utilities that have jointly applied for a financing order as provided in
subdivision (1), subsection (c) of this section, a financing order
may authorize each affiliated qualifying utility:
(A) to impose environmental control charges on its customers,
notwithstanding the fact that the qualifying generating facility at
which the environmental control activities are to be conducted is
owned, or on the expected date of issuance of the environmental
control bonds authorized in the financing order will be owned, by
fewer than all of the affiliated qualifying utilities; and
(B) To issue environmental control bonds and to receive and
use the proceeds thereof as provided in subdivision (1), subsection
(j) of this section, notwithstanding the fact that all or a portion
of the proceeds are expected to be used for environmental control
activities to be conducted at a qualifying generating facility the
ownership of which is as specified in paragraph (A) of this
subdivision.
(e) Application of adjustment mechanism. --
(1) If the Commission issues a financing order, the Commission
shall periodically approve the application of the adjustment
mechanism specified in the financing order to correct for any
over-collection or under-collection of the environmental control
charges and to provide for timely payment of scheduled principal of
and interest on the environmental control bonds and the payment and
recovery of other financing costs in accordance with the financing order. Application of the adjustment mechanism shall occur at
least annually or more frequently as provided in the financing
order.
(2) On the same day the qualifying utility files with the
Commission its calculation of the adjustment, it shall cause notice
of the filing to be given, in the form specified in the financing
order, as a Class I legal advertisement in compliance with the
provisions of article three, chapter fifty-nine of this code in a
newspaper of statewide circulation published each weekday in
Kanawha County: Provided, That this publication shall be made only
if the calculation of the adjustment filed by the qualifying
utility with the Commission would result in an increase in the
amount of the environmental control charge.
(3) The Commission shall allow interested parties thirty days
from the date the qualifying utility filed the calculation of the
adjustment within which to make comments, which shall be limited to
the mathematical accuracy of the calculation and of the amount of
the adjustment. If the Commission determines that a hearing is
necessary, the Commission shall hold a hearing on the comments
within forty days of the date the qualifying utility filed the
calculation of the adjustment.
(4) Each adjustment to the environmental control charge, in an
amount as calculated by the qualifying utility but incorporating
any correction for mathematical inaccuracy as determined by the Commission at or after the hearing, shall automatically become
effective: (i) Sixty days following the date on which the
qualifying utility files with the Commission its calculation of the
adjustment; or (ii) on any earlier date specified in an order of
the Commission approving the application of the adjustment.
(5) No adjustment pursuant to this subsection, and no
proceeding held pursuant to this subsection, shall in any way
affect the irrevocability of the financing order as specified in
subsection (f) of this section.
(f) Irrevocability of financing order. --
(1) A financing order is irrevocable and the Commission may
not reduce, impair, postpone or terminate the environmental control
charges approved in the financing order or impair the environmental
control property or the collection or recovery of environmental
control revenues.
(2) A financing order may be subsequently amended on or after
the date of issuance of environmental control bonds authorized
thereunder only: (A) At the request of the qualifying utility; (B)
in accordance with any restrictions and limitations on amendment
set forth in the financing order; and (C) subject to the
limitations set forth in subdivision (1) of this subsection.
(3) No change in the credit rating on the unsecured
obligations of a qualifying utility from the credit rating that
supported the determination by the Commission required in paragraph (A), subdivision (3), subsection (d) of this section shall impair
the irrevocability of the financing order specified in subdivision
(1) of this subsection.
(g) Judicial review. -- An order of the Commission issued
pursuant to subdivision (2), subsection (d) of this section is a
final order of the Commission. Any party aggrieved by the issuance
of any such order may petition for suspension and review thereof by
the Supreme Court of Appeals pursuant to section one, article five
of this chapter. In the case of any petition for suspension and
review, the Supreme Court of Appeals shall proceed to hear and
determine the action as expeditiously as practicable and give the
action precedence over other matters not accorded similar
precedence by law.
(h) Effect of financing order. --
(1) A financing order shall remain in effect until the
environmental control bonds issued pursuant to the financing order
have been paid in full and all financing costs relating to the
environmental control bonds have been paid in full.
(2) A financing order shall remain in effect and unabated
notwithstanding the bankruptcy, reorganization or insolvency of the
qualifying utility or any affiliate thereof or the commencement of
any judicial or nonjudicial proceeding therefor.
(3) For so long as environmental control bonds issued pursuant
to a financing order are outstanding and the related environmental control costs and financing costs have not been paid in full, the
environmental control charges authorized to be imposed in the
financing order shall be nonbypassable and shall apply to:
(A) All customers of the qualifying utility located within the
utility service area, whether or not the customers may become
entitled by law to purchase electric generation services from a
provider of electric generation services other than a qualifying
utility; and
(B) Any person or legal entity located within the utility
service area that may subsequently receive electric delivery
service from another public utility operating in the same service
area.
(i) Limitations on jurisdiction of Commission. --
(1) If the Commission issues a financing order, the Commission
may not, in exercising its powers and carrying out its duties
regarding regulation and ratemaking, consider environmental control
bonds issued pursuant to the financing order to be the debt of the
qualifying utility, the environmental control charges paid under
the financing order to be revenue of the qualifying utility, or the
environmental control costs or financing costs specified in the
financing order to be the costs of the qualifying utility, nor may
the Commission determine that any action taken by a qualifying
utility that is consistent with the financing order is unjust or
unreasonable from a regulatory or ratemaking perspective: Provided, That subject to the limitations set forth in subsection
(f) of this section, nothing in this subdivision shall: (i) Affect
the authority of the Commission to apply the adjustment mechanism
as provided in subsection (e) of this section; (ii) prevent or
preclude the Commission from investigating the compliance of a
qualifying utility with the terms and conditions of a financing
order and requiring compliance therewith; or (iii) prevent or
preclude the Commission from imposing regulatory sanctions against
a qualifying utility for failure to comply with the terms and
conditions of a financing order or the requirements of this
section.
(2) The Commission may not order or otherwise require,
directly or indirectly, any public utility to use environmental
control bonds to finance any project, addition, plant, facility,
extension, capital improvement, environmental control equipment or
any other expenditure.
(3) The Commission may not refuse to allow the recovery of any
costs associated with the performance of environmental control
activities by a public utility solely because the public utility
has elected or may elect to finance the performance of those
activities through a financing mechanism other than the issuance of
environmental control bonds.
(j) Duties of qualifying utility. --
(1) A qualifying utility for which a financing order has been issued shall cause the proceeds of any environmental control bonds
issued pursuant to a financing order to be placed in a separate
account. A qualifying utility may use the proceeds of the issuance
of environmental control bonds for paying environmental control
costs and financing costs and for no other purpose.
(2) A qualifying utility for which a financing order has been
issued shall annually provide to its customers a concise
explanation of the environmental control charges approved in a
financing order, as modified by subsequent issuances of
environmental control bonds authorized under a financing order, if
any, and by application of the adjustment mechanism as provided in
subsection (e) of this section. These explanations may be made by
bill inserts, website information or other appropriate means.
(3) Environmental control revenues shall be applied solely to
the repayment of environmental control bonds and other financing
costs.
(4) The failure of a qualifying utility to apply the proceeds
of an issuance of environmental control bonds in a reasonable,
prudent and appropriate manner or otherwise comply with any
provision of this section shall not invalidate, impair or affect
any financing order, environmental control property, environmental
control charge or environmental control bonds: Provided, That
subject to the limitations set forth in subsection (f) of this
section, nothing in this subdivision shall prevent or preclude the Commission from imposing regulatory sanctions against a qualifying
utility for failure to comply with the terms and conditions of a
financing order or the requirements of this section.
(k) Environmental control property. --
(1) Environmental control property that is specified in a
financing order shall constitute an existing, present property
right, notwithstanding the fact that the imposition and collection
of environmental control charges depend on the qualifying utility
continuing to provide electric energy or continuing to perform its
servicing functions relating to the collection of environmental
control charges or on the level of future energy consumption.
Environmental control property shall exist whether or not the
environmental control revenues have been billed, have accrued or
have been collected and notwithstanding the fact that the value or
amount of the environmental control property is dependent on the
future provision of service to customers by the qualifying utility.
(2) All environmental control property specified in a
financing order shall continue to exist until the environmental
control bonds issued pursuant to a financing order are paid in full
and all financing costs relating to the bonds have been paid in
full.
(3) All or any portion of environmental control property may
be transferred, sold, conveyed or assigned to any person or entity
not affiliated with the qualifying utility or to any affiliate of the qualifying utility created for the limited purposes of
acquiring, owning or administering environmental control property
or issuing environmental control bonds under the financing order or
a combination of these purposes. All or any portion of
environmental control property may be pledged to secure the payment
of environmental control bonds, amounts payable to financing
parties and bondholders, amounts payable under any ancillary
agreement and other financing costs. Any transfer, sale,
conveyance, assignment, grant of a security interest in or pledge
of environmental control property by a qualifying utility or
affiliate of a qualifying utility to an affiliate of the qualifying
utility, to the extent previously authorized in a financing order,
does not require the prior consent and approval of the Commission
under section twelve of this article.
(4) If a qualifying utility defaults on any required payment
of environmental control revenues, a court, upon application by an
interested party and without limiting any other remedies available
to the applying party, shall order the sequestration and payment of
the environmental control revenues for the benefit of bondholders,
any assignee and any financing parties. The order shall remain in
full force and effect notwithstanding any bankruptcy,
reorganization, or other insolvency proceedings with respect to the
qualifying utility or any affiliate thereof.
(5) Environmental control property and environmental control revenues, and the interests of an assignee, bondholder or financing
party in environmental control property and environmental control
revenues, are not subject to setoff, counterclaim, surcharge or
defense by the qualifying utility or any other person or in
connection with the bankruptcy, reorganization or other insolvency
proceeding of the qualifying utility, any affiliate thereof or any
other entity.
(6) Any successor to a qualifying utility shall be bound by
the requirements of this section and shall perform and satisfy all
obligations of, and have the same rights under a financing order
as, the qualifying utility under the financing order in the same
manner and to the same extent as the qualifying utility, including,
without limitation, the obligation to collect and pay to the person
entitled to receive them environmental control revenues.
(l) Security interests. -- Except as otherwise provided in
this subsection, the creation, perfection and enforcement of any
security interest in environmental control property to secure the
repayment of the principal of and interest on environmental control
bonds, amounts payable under any ancillary agreement and other
financing costs are governed by this subsection and not the
provisions of chapter forty-six of this code. All of the following
shall apply:
(1) The description or indication of environmental control
property in a transfer or security agreement and a financing statement is sufficient only if the description or indication
refers to this section and the financing order creating the
environmental control property. This subdivision applies to all
purported transfers of, and all purported grants of liens on or
security interests in, environmental control property, regardless
of whether the related transfer or security agreement was entered
into, or the related financing statement was filed, before or after
the effective date of this section.
(2) A security interest in environmental control property is
created, valid, and binding at the later of the time: (i) The
financing order is issued; (ii) a security agreement is executed
and delivered; and (iii) value is received for the environmental
control bonds. The security interest attaches without any physical
delivery of collateral or other act and the lien of the security
interest shall be valid, binding and perfected against all parties
having claims of any kind in tort, contract or otherwise against
the person granting the security interest, regardless of whether
such parties have notice of the lien, upon the filing of a
financing statement with the office of the Secretary of State. The
office of the Secretary of State shall maintain any such financing
statement in the same manner and in the same record-keeping system
it maintains for financing statements filed pursuant to article
nine, chapter forty-six of this code. The filing of any financing
statement under this subdivision shall be governed by the provisions regarding the filing of financing statements in said
article.
(3) A security interest in environmental control property is
a continuously perfected security interest and has priority over
any other lien, created by operation of law or otherwise, which may
subsequently attach to the environmental control property unless
the holder of any such lien has agreed in writing otherwise.
(4) The priority of a security interest in environmental
control property is not affected by the commingling of
environmental control revenues with other amounts. Any pledgee or
secured party shall have a perfected security interest in the
amount of all environmental control revenues that are deposited in
any cash or deposit account of the qualifying utility in which
environmental control revenues have been commingled with other
funds and any other security interest that may apply to those funds
shall be terminated when they are transferred to a segregated
account for the assignee or a financing party.
(5) No subsequent order of the Commission amending a financing
order pursuant to subdivision (2), subsection (f) of this section,
and no application of the adjustment mechanism as provided in
subsection (e) of this section, will affect the validity,
perfection or priority of a security interest in or transfer of
environmental control property.
(m) Sales of environmental control property. --
(1) Any sale, assignment or transfer of environmental control
property shall be an absolute transfer and true sale of, and not a
pledge of or secured transaction relating to, the seller's right,
title and interest in, to and under the environmental control
property if the documents governing the transaction expressly state
that the transaction is a sale or other absolute transfer. A
transfer of an interest in environmental control property may be
created only when all of the following have occurred: (i) The
financing order creating the environmental control property has
become effective; (ii) the documents evidencing the transfer of
environmental control property have been executed and delivered to
the assignee; and (iii) value is received. Upon the filing of a
financing statement with the office of the Secretary of State, a
transfer of an interest in environmental control property shall be
perfected against all third persons, including any judicial lien or
other lien creditors or any claims of the seller or creditors of
the seller, other than creditors holding a prior security interest,
ownership interest or assignment in the environmental control
property previously perfected in accordance with this subdivision
or subdivision (2), subsection (l) of this section. The office of
the Secretary of State shall maintain any such financing statement
in the same manner and in the same record-keeping system it
maintains for financing statements filed pursuant to article nine,
chapter forty-six of this code.
(2) The characterization of the sale, assignment or transfer
as an absolute transfer and true sale and the corresponding
characterization of the property interest of the purchaser, shall
not be affected or impaired by, among other things, the occurrence
of any of the following factors:
(A) Commingling of environmental control revenues with other
amounts;
(B) The retention by the seller of: (i) A partial or residual
interest, including an equity interest, in the environmental
control property, whether direct or indirect, or whether
subordinate or otherwise; or (ii) the right to recover costs
associated with taxes, franchise fees or license fees imposed on
the collection of environmental control revenues;
(C) Any recourse that the purchaser may have against the
seller;
(D) Any indemnification rights, obligations or repurchase
rights made or provided by the seller;
(E) The obligation of the seller to collect environmental
control revenues on behalf of an assignee;
(F) The treatment of the sale, assignment or transfer for tax,
financial reporting or other purposes;
(G) Any subsequent order of the Commission amending a
financing order pursuant to subdivision (2), subsection (f) of this
section; or
(H) Any application of the adjustment mechanism as provided in
subsection (e) of this section.
(n) Exemption from municipal taxation. -- The imposition,
collection and receipt of environmental control revenues are not
subject to taxation by any municipality of the state under the
authority granted to municipalities in sections five and five-a,
article thirteen, chapter eight of this code.
(o) Environmental control bonds not public debt. --
Environmental control bonds issued pursuant to a financing order
and the provisions of this section shall not constitute a debt or
a pledge of the faith and credit or taxing power of this state or
of any county, municipality or any other political subdivision of
this state. Bondholders shall have no right to have taxes levied
by the Legislature or the taxing authority of any county,
municipality or any other political subdivision of this state for
the payment of the principal thereof or interest thereon. The
issuance of environmental control bonds does not, directly or
indirectly or contingently, obligate the state or a political
subdivision of the state to levy any tax or make any appropriation
for payment of the principal of or interest on the bonds.
(p) Environmental control bonds as legal investments. -- Any
of the following may legally invest any sinking funds, moneys or
other funds belonging to them or under their control in
environmental control bonds:
(1) The state, the West Virginia Investment Management Board,
the West Virginia Housing Development Fund, municipal corporations,
political subdivisions, public bodies and public officers except
for members of the Public Service Commission.
(2) Banks and bankers, savings and loan associations, credit
unions, trust companies, building and loan associations, savings
banks and institutions, deposit guarantee associations, investment
companies, insurance companies and associations and other persons
carrying on a banking or insurance business, including domestic for
life and domestic not for life insurance companies; and
(3) Personal representatives, guardians, trustees and other
fiduciaries.
(q) State pledge. --
(1) The state pledges to and agrees with the bondholders, any
assignee and any financing parties that the state will not take or
permit any action that impairs the value of environmental control
property or, except as allowed under subsection (e) of this
section, reduce, alter or impair environmental control charges that
are imposed, collected and remitted for the benefit of the
bondholders, any assignee, and any financing parties, until any
principal, interest and redemption premium in respect of
environmental control bonds, all financing costs and all amounts to
be paid to an assignee or financing party under an ancillary
agreement are paid or performed in full.
(2) Any person who issues environmental control bonds is
permitted to include the pledge specified in subdivision (1) of
this subsection in the environmental control bonds, ancillary
agreements and documentation related to the issuance and marketing
of the environmental control bonds.
(r) Choice of law. -- The law governing the validity,
enforceability, attachment, perfection, priority and exercise of
remedies with respect to the transfer of an interest or right or
creation of a security interest in any environmental control
property, environmental control charge or financing order shall be
the laws of the State of West Virginia as set forth in this section
and article nine, chapter forty-six of this code.
(s) Conflicts. -- In the event of conflict between this
section and any other law regarding the attachment, assignment or
perfection, or the effect of perfection, or priority of any
security interest in or transfer of environmental control property,
this section shall govern to the extent of the conflict.
(t) Effect of invalidity on actions. -- Effective on the date
that environmental control bonds are first issued under this
section, if any provision of this section is held to be invalid or
is invalidated, superseded, replaced, repealed or expires for any
reason, that occurrence shall not affect any action allowed under
this section that is taken by the Commission, a qualifying utility,
an assignee, a collection agent, a financing party, a bondholder, or a party to an ancillary agreement and any such action shall
remain in full force and effect.
(u) Effectiveness of section. -- No qualifying utility may
make initial application for a financing order after the date which
is five years after the effective date of this section. This
subsection shall not be construed to preclude any qualifying
utility for which the Commission has initially issued a financing
order from applying to the Commission: (i) For a subsequent order
amending the financing order pursuant to subdivision (2),
subsection (f) of this section; or (ii) for approval of the
issuance of environmental control bonds to refund all or a portion
of an outstanding series of environmental control bonds.
(v) Severability. -- If any subsection, subdivision,
paragraph or subparagraph of this section or the application
thereof to any person, circumstance or transaction is held by a
court of competent jurisdiction to be unconstitutional or invalid,
the unconstitutionality or invalidity shall not affect the
constitutionality or validity of any other subsection, subdivision,
paragraph or subparagraph of this section or its application or
validity to any person, circumstance or transaction, including,
without limitation, the irrevocability of a financing order issued
pursuant to this section, the validity of the issuance of
environmental control bonds, the imposition of environmental
control charges, the transfer or assignment of environmental control property or the collection and recovery of environmental
control revenues. To these ends, the Legislature hereby declares
that the provisions of this section are intended to be severable
and that the Legislature would have enacted this section even if
any subsection, subdivision, paragraph or subparagraph of this
section held to be unconstitutional or invalid had not been
included in this section.

CHAPTER 46. UNIFORM COMMERCIAL CODE.

ARTICLE 9. SECURED TRANSACTIONS; SALES OF ACCOUNTS AND CHATTEL
PAPER.

SUBPART 2. APPLICABILITY OF ARTICLE.

§46-9-109. Scope.
(a) General scope of article. -- Except as otherwise provided
in subsections (c) and (d) of this section, this article applies
to:
(1) A transaction, regardless of its form, that creates a
security interest in personal property or fixtures by contract;
(2) An agricultural lien;
(3) A sale of accounts, chattel paper, payment intangibles or
promissory notes;
(4) A consignment;
(5) A security interest arising under section 2-401, 2-505,
2-711(3) or 2A-508(5) as provided in section 9-110; and
(6) A security interest arising under section 4-210 or 5-118.
(b) Security interest in secured obligation. -- The
application of this article to a security interest in a secured
obligation is not affected by the fact that the obligation is
itself secured by a transaction or interest to which this article
does not apply.
(c) Extent to which article does not apply. -- This article
does not apply to the extent that:
(1) A statute, regulation or treaty of the United States
preempts this article; or
(2) The rights of a transferee beneficiary or nominated person
under a letter of credit are independent and superior under section
5-114.
(d) Inapplicability of article. -- This article does not
apply to:
(1) A landlord's lien, other than an agricultural lien;
(2) A lien, other than an agricultural lien, given by statute
or other rule of law for services or materials, but section 9-333
applies with respect to priority of the lien;
(3) An assignment of a claim for wages, salary or other
compensation of an employee;
(4) A sale of accounts, chattel paper, payment intangibles or
promissory notes as part of a sale of the business out of which
they arose;
(5) An assignment of accounts, chattel paper, payment intangibles or promissory notes which is for the purpose of
collection only;
(6) An assignment of a right to payment under a contract to an
assignee that is also obligated to perform under the contract;
(7) An assignment of a single account, payment intangible or
promissory note to an assignee in full or partial satisfaction of
a preexisting indebtedness;
(8) A transfer of an interest in or an assignment of a claim
under a policy of insurance, other than an assignment by or to a
health care provider of a health care-insurance receivable and any
subsequent assignment of the right to payment, but sections 9-315
and 9-322 apply with respect to proceeds and priorities in
proceeds;
(9) An assignment of a right represented by a judgment, other
than a judgment taken on a right to payment that was collateral;
(10) A right of recoupment or set-off, but:
(A) Section 9-340 applies with respect to the effectiveness of
rights of recoupment or set-off against deposit accounts; and
(B) Section 9-404 applies with respect to defenses or claims
of an account debtor;
(11) The creation or transfer of an interest in or lien on
real property, including a lease or rents thereunder, except to the
extent that provision is made for:
(A) Liens on real property in sections 9-203 and 9-308;
(B) Fixtures in section 9-334;
(C) Fixture filings in sections 9-501, 9-502, 9-512, 9-516,
and 9-519; and
(D) Security agreements covering personal and real property in
section 9-604;
(12) An assignment of a claim arising in tort, other than a
commercial tort claim, but sections 9-315 and 9-322 apply with
respect to proceeds and priorities in proceeds;
(13) An assignment of a deposit account in a consumer
transaction, but sections 9-315 and 9-322 apply with respect to
proceeds and priorities in proceeds;
(14) A transfer by a government or a governmental unit; or
(15) A transfer of security interest in any interest or right,
or any portion or any interest or right in any environmental
control property, environmental control charge or financing order
as each term is defined in section four-e, article two, chapter
twenty-four of this code.